There have been companies trying to sell downloadable movies for years now but by and large they have been small and mostly ignored. It looks like that is going to change in 2007.

Last year Apple made a deal with Disney to sell movies over iTunes. Apparently Jobs wanted to set a download price of $10 but was forced to go with a split pricing scheme ($15 for new movies; $10 for old ones) due to pressure from movie companies.

In particular, Wal-Mart pushed back on the whole idea of movie downloads, which is important because Wal-Mart alone accounts for 40% of the $17B DVD business. Wal-Mart charges $20 for a DVD and supposedly pays movie industry $17 for each title. To combat Apple, Wal-Mart asked the movie suppliers to drop their price for physical DVD's to $14 or less so that Wal-Mart could match Apples $15 price - which seems a little odd since downloading a movie really should cost less than a physical disk, which needs to be manufactured and shipped.

But that was six months ago.

Step forward to today and the game is on! Wal-Mart has announced their own downloadable movie service (albeit at the higher $20 DVD price). What remains to be seen is whether anyone will care. Unlike Apple, Wal-Mart does not sell hardware so they do not have a solution for the "last mile" - the connection from your computer to your TV. Apple on the other hand offers both video iPods and the new Apple TV device.

So Apple stands-alone with a hardware+software movie download system (unless you count the Microsoft Xbox 360 product, which you probably should) but the ranks of the software-only companies is growing. Wal-Mart, Amazon Unbox, and Netflix will all be offering download services that match their well known brands.

It appears that 2007 is going to be the year of the downloadable movie. (My only wish is that 2007 will also be the year of affordable, truly high-speed broadband to the home.) With any luck, this growing competition will be a boon to consumers.